There’s a Lesson for U.S. Cities in Irish Experience

St. Patrick’s Day will be celebrated as usual in Washington today, with President Clinton meeting Ireland’s Prime Minister Albert Reynolds at the White House and joining him at a Capitol luncheon hosted by Speaker of the House Thomas S. Foley. Green will be worn and sentiments will flow about a small island country and the generations of immigrants who came from there.

But Clinton and members of Congress concerned with struggling U.S. cities should look beyond the blarney to learn how Ireland, a relatively poor country, has used education to adapt to the modern, global economy. No longer a nation of poor farmers and penniless emigrants, Ireland has, with difficulty, made itself a haven for electronics and software companies and for international trade in services, which is growing much faster than trade in merchandise.

To be sure, Ireland is not the only small country to realize that brainpower is the key to success in the global economy--Israel and Singapore come to mind, among others.

But Ireland is particularly interesting because its problems, stated in cold statistics, give it the characteristics of an economically devastated U.S. city. Ireland has 3.5 million people, 45% of them below the age of 25, 27% of them in school and 18% of the work force unemployed. It’s a country that never has provided enough jobs for its people, who as a consequence have scattered--one reason Speaker Foley is in the U.S. Congress and not the Irish Parliament.

And it won’t be providing enough work anytime soon. Because of a baby boom in the 1970s, Ireland now has 25,000 youngsters coming into the labor force each year. But its economy is creating only half that many jobs. More than 10,000 are left to emigrate or stay idle each year.

Ireland recognized years ago it needed investment. But as a small country with a gross national product of $11,000 per person--low by West European standards but high in comparison with developing countries--it could not compete for ordinary factory jobs.

So Ireland decided to go for modern service industries, with jobs that demand more education, judgment and training. Accordingly, the Irish government increased its expenditure on education--today’s $1.6 billion a year is more than 30 times Ireland’s education spending in the early ‘70s.

And Ireland invested in an up-to-date telephone system, an essential to making itself a supply base for the European Common Market, which it entered in 1972.

The strategy paid off in foreign investment by more than 1,000 companies--360 from the United States, 180 from Germany, 170 from Britain and so on. The roster reads like a Who’s Who of high tech: Intel, Motorola, IBM, Apple Computer, Microsoft, Lotus, Borland and many others. Ireland isn’t unique--nearby Scotland has even more computer investors.

But Ireland got what it needed: well-paying technology jobs for its growing numbers of college graduates. And of particular relevance to U.S. cities is how the information industry has provided work for high school graduates.

Ireland has become an electronic back office for U.S. and European insurance companies. Claims made to Metropolitan Life, Cigna, New York Life and others are jetted overnight to Ireland, processed on computers and the pertinent information sent back electronically to the United States. More than simple data entry is involved; judgments must be made. The jobs require a literate work force with mathematical skills.

Quarter Deck Office Systems, a Los Angeles software firm, uses Ireland as a customer service center. Calls from Europe are automatically shifted to Dublin and the customer’s problem analyzed in German or French or whatever the applicable language.

H. W. Wilson Co., a specialist in scientific and legal abstracts based in a depressed neighborhood in the Bronx, N.Y., has articles abstracted and put on computer disks in Ireland.

The jobs come at a price, and the Irish people pay it. One of Ireland’s investment incentives is a 10% corporate tax--enticing companies to book profit in Ireland to avoid tax elsewhere. But the Irish themselves pay a 48% income tax after the first $15,000 of income, and a hefty value-added tax on many purchases.

The Clinton Administration and Rep. Dan Rostenkowski (D.-Ill.), chairman of the Ways and Means Committee, object to Ireland’s business tax breaks, and will argue with Prime Minister Reynolds for their removal.

Reynolds will argue back that the United States enjoys a $1-billion-plus trade surplus with Ireland and that U.S. companies need to be in the Common Market. So canceling Ireland’s tax breaks would not bring the companies home.

But the real message from Ireland is that tax breaks, coupled with an educated work force, could bring service industry investment to U.S. inner cities. It works in Jamaica, for example, which processes address changes for U.S. magazine companies.

Meanwhile, Irish emigration continues, but with a difference. Many emigrants these days are voluntary--Ireland supplies dentists to Britain, computer specialists to Germany and business executives to the United States. Such emigrants enjoy far greater opportunities, and self confidence, than the poor people of former times who came to America with their belongings in cardboard suitcases.

The new emigrants are beneficiaries of the Irish taxpayers’ commitment to educating their children.

Clinton and members of Congress, as they toast old Ireland on St. Patrick’s Day, might ponder a similar commitment to the poor of America’s cities.